What is Term Insurance or term life insurance?

Term Insurance or term life insurance is a type of insurance that is purchased for a certain term. It financially protects the beneficiary if the policyholder expires before the term ends. Some insurance companies also provide survival benefits where the policyholder gets a lump sum even if he is alive at the end of the term.

Who needs Term Insurance?

In case of the unfortunate death of the main earning member of a family, a Term Insurance acts as a life-saver. If the policy is valid and all premiums have been paid on time, then the beneficiary receives a lump sum. The best term insurance plans offer the family financial assistance to tide over difficult times.

How does Term Insurance work?

  • Once a customer decides the policy term and the coverage amount, the premium for Term Insurance plan is calculated based on multiple factors like age, health, coverage amount, term etc. This premium remains constant throughout the policy term.
  • The premium can be paid at regular intervals or just once. The policyholder can also decide how he wants to receive the coverage amount.
  • Once a policy is purchased, in case of the demise of the policyholder during the term, the insurance company pays the coverage amount to the beneficiary named in the policy.
  • If the policyholder is alive at the end of the term, the coverage ends, usually without any financial payment from the company. However, if the policy includes survival benefits, then once the policy matures, the policyholder will get a lump sum.
  • After the policy term is over, if the policy allows renewal and the policyholder wants to renew the policy, then the policy can be renewed. Generally, renewals are allowed till the policyholder reaches the maximum age defined by the insurer. However, in case of renewals, the premium is recalculated for the new term

Features and benefits of Term Insurance plans

The best Term Insurance plans provide financial security to the beneficiary in case of the death of the policyholder. Additionally, there are some key benefits that you need to be aware of.

Tax Benefits – Under section 80C and 10D of the Income Tax Act 1961, term life insurance plans offer dual tax benefits to the policyholder. The annual premium paid, up to Rs 1.5 lakh a year, is eligible for tax deduction under Sec 80C. Moreover, under Sec 10D, the death benefit received is also non-taxable.

Flexibility – The policy term can range from 5 years to whole life (until death). The premium can be paid monthly, quarterly, bi-annually, annually or even one-time.

Ease of purchase – Term Insurance plans can be bought either online or offline.

Payout options – The coverage amount can be paid either as a lump sum or staggered over multiple years, based on what you choose while buying the policy.

Additional riders – Add-on benefits for critical illness, disability, etc, can be bought if needed.

What are the different types of Term Insurance?

There are different types of Term plans. You need to understand and compare term life insurance plans before deciding on the one you want to buy.

Pure term plan – This is the most basic term insurance plan, and the cheapest. Here, a fixed sum assured is paid to the beneficiary in case of the death of the policyholder. However, the policyholder gets nothing if he survives the term.

Return of premium plan – In these plans, in case of the death of the policyholder the beneficiary gets the sum assured and if the policyholder survives the term, the premium paid is returned. These policies are more expensive than pure term plans.

Increasing plan – In these plans, the amount of cover increases by about 5% every year until the sum assured doubles in value. Since these plans are quite expensive, go for them only if you feel your assets won't be adequate to meet the needs of your family.

Decreasing plan – The opposite of increasing plan, the sum assured in this plan decreases every year. These are useful if your financial status and savings are increasing and so the need of a life cover is reducing over time.

Joint life plan – A couple can buy these plans together, both getting the same advantages. It ensures their dependent children or parents have no financial worries in case they pass away together.

Exclusion

In case of death due to suicide within 12 months of buying the policy, the beneficiary does not get the sum assured. However, the premium paid by the policyholder is paid back, after deducting taxes.

What are the points to be kept in mind while buying a Term Insurance policy

  • Determine the coverage needed. Remember that the final sum assured should be at least 15 times what you are currently earning, to account for rising costs and inflation.
  • Have a clear understanding of your need and your budget
  • Understand the claims procedure clearly.
  • Understand the Rights of the Policyholder
  • Provide accurate and true information while buying the plan
  • Choose the Right Insurance Company

Read the policy document and the fine print thoroughly and understand the policy before buying it.

Comparison of Term Life Insurance plans available in India

Since there are a lot of insurance companies that offer Term Insurance policies in India, it is wise to compare Term Life Insurance plans and understand what suits your needs. While comparing check the following:

  • Premium, features and exclusion.
  • Hidden clauses
  • Credibility of the insurance company and its claim-settlement ratio
  • In addition to the regular Term Insurance policies, check the riders being offered by the company as well. Riders give you added protection.

The Best Term Insurance Plans in India

Here is a term insurance comparison offered by various companies to help you make a good decision and choose the best term insurance plan.

Term Plan Name Policy Term
(Min-Max) years
Minimum Sum Assured
(in lakhs)
Premium* per annum
(in Rs)
ICICI Prudential iProtect Smart (Life option) 5 - 40 NA 4900
HDFC Life Click2Protect Plus (Life option) 10 - 40 25 5400
SBI Life Smart Shield Plan 5 - 30 20 4300
LIC eTerm Plan 10 - 35 25 6700
Max Life Online Term Plus 10 - 35 25 5100

Note: *Considering a male non-smoker aged 30 years, Sum Assured 25 Lakhs, Policy term 30-35 years

Why Choose Turtlemint?

Turtlemint helps you buy the best term insurance plan online. Life Insurance benefits are given out to people at the most stressful times of their lives; so we help make the process easier.

Our USPs

  • 24X7 online chat support
  • Free insurance consultation
  • Online Term Insurance comparison for easier decision-making
  • Competitive premiums
  • Issuing policy round the clock
  • Comprehensive blogs and FAQs to explain things clearly to our customers
  • Policy accessible on our website for the customers with easy download facility

Conclusion: The Best Term Insurance plans – A plain vanilla plan or a plan with riders or one with lump sum or income benefit?

Death often comes unannounced, so it is good to have a contingency plan. A Term Insurance plan is one such back-up plan to provide for the family in case of untimely death of the main earning member.

A plain vanilla Term Insurance plan can be a good choice when you want a simple plan. If you buy this at a young age, you get a high sum assured for a low rate of premium. If you can pay a slightly higher premium, then you can take add-on riders for critical illness, disability etc. However, if you take add-ons, the premium becomes almost double that of a pure term plan. A pure term plan is always the best choice for financially protecting your loved ones. But if you can afford to pay extra, buy add-ons for extra protection

The choice of the pay-out – lump sum or fixed monthly amount – can be decided depending on the need of the family. A fixed monthly amount can help meet the regular expenses. However, a lump sum can be used to pay off a pending loan or cover educational and marriage expenses. While buying, check with the Insurance Company whether you have the freedom to choose the mode of pay-outs.


FAQs

Life insurance assures payment of a particular sum of money to the nominee in case of death of the life insured. Term Insurance is a type of life insurance which sets a cap on the time period during which the policy is active.



A term life insurance financially protects your family in case of your unfortunate demise. Irrespective of whether you are the sole earning member of your family or not, it is advisable to buy a term life insurance to help take care of your loved ones’ needs.


The premium paid is tax exempt under Section 80C of the Income Tax Act 1961, up to a limit of Rs 1.5 lakhs per annum. The maturity benefits are also exempted from tax under section 10 (10D).


Riders are available in Term Insurance policy to help enhance the coverage in the policy. Riders can be for accidental death, disability, critical illness, waiver of premium and income benefit.


It is very important to buy Term Insurance policy from a reliable insurance company. Check the claim settlement ratio of the company, the number of claim rejections, customer grievance redressal mechanism etc. Also search the web for the reputation of a company. A reliable insurance company should have a high claim settlement ratio, low number of claim rejections, a good grievance redressal mechanism and a good online reputation with fewer complaints.


If the policyholder dies within the term of the policy, a claim intimation needs to be sent to the insurance company. The company will provide a form to be filled up and ask for documents like death certificate, original policy document, proof of identity etc. Once all the required documents are submitted, the process will be initiated.


Traditional term insurance plans pay out the coverage amount only if the policyholder dies during the policy term. In plans with survival benefits, the policyholder gets a lump sum even if he is alive at the end of the term.

Life Insurance Companies

  • HDFC Standard Life Insurance
  • Aegon Life Insurance
  • ICICI Prudential Life Insurance
  • IDBI Federal Life Insurance
  • SBI Life Insurance Company
  • Edelweiss Tokio Life Insurance